SME Times News Bureau | 15 Jan, 2023
looking at better lending rates, which would help the developers’ complete
projects on the fastrack, said Manik Anand CEO, White Knight Realty, in
an exclusive email interview with SME Times.
Excerpts of the interview…
the leading real estate portfolio management company, is commercial real estate
investment a good plan?
Absolutely. Commercial real estate investments offer much higher ROIs than
those on residential investments. You are looking at ROIs between 6–12%, and in
some cases, we have even achieved 15–18% ROI per annum. The tenants are primarily
MNCs or a variety of retail brands. Retail availability is already limited. If
you look at the Noida Master Plan of 2032, only around 1.7% of the total land
area in the region is dedicated to commercial development. However, with the
influx of multiple IT powerhouses and Fortune 500 companies such as Google, Ernst
&Young, PWC, NEC, Infosys, TCS, KPMG, and Accenture etc setting up shop on
the Noida Expressway, the future looks promising and bright.
What are the trigger points for commercial real estate?
I would say that return on investment in residential properties is low. The
rental rates on residential properties generally range from 1 to 1.5% annually,
capping out at 2–2.5%. This does not even cover inflation, which is hovering at
around 7%. Therefore, I advise that, if you already possess a home, you should
not look at residential investments to obtain greater capital gains; rather,
you should consider commercial investments. In the long term, commercial
investments consistently outperform traditional investments, such as mutual
funds, equities, stocks, and commodities.
From a bird's-eye view, how will 2023 turn out for the real estate sector?
looking very promising, lots of influx in the Noida region, primarily. The main
catalyst for this is the upcoming International Airport. Delhi, the capital of
the country, is set to get its second international airport, which is also set
to be the third largest airport in the world and the biggest in Asia. This has
led to a lot of interest from all global markets. Especially with the US and
European regions seeing a downturn and a recession of sorts in the last year,
with the interest rate hiking up and inflation at record levels currently,
people from all over the world are looking at India as an investment option.
Due to which, the unsold inventory in the region is currently may be at a 10 year
low right now. A lot of industries, warehouses, corporate clients, and Fortune
500 companies are setting up shop in the region because of the excellent
infrastructure that the region has to offer and the excellent connectivity to all
of North India from the expressways that the region has to offer; the airport;
the metro; and the existing connectivity to Delhi that the city has. So, it's
all guns blazing for 2023.
the luxury real estate market influencing investors to invest in luxury property?
Answer- That's a good
question. When I say that you shouldn't be looking at residential property to
invest in, the luxury real estate is on another tangent altogether. We saw this
majorly during the pandemic. If they must be cocooned in the house, the kids
need a separate room to attend the online classes and study, while the elder
members of the family have to work from home and set up home offices. So, the
people realised that the existing areas were too small, and that is what led to
the rise in inquiries right after the first lockdown was lifted in August 2020.
We have also seen unprecedented launches across the country and, at the same
time, an excellent response from the global NRI audience, looking to acquire a
piece of land or an apartment back home. With the dollar also touching a record
high, it makes sense to buy real estate in the country now and take advantage
of it. That is what drove the luxury real estate segment for a three-bedroom
apartment ranging from about 2,000 to 3,000 square feet, going up to plush
4BHKs at 6 to 10,000 square feet. Generally, these bigger apartments with
better specifications also tend to offer higher rentals than the other normal
budget homes or normal housing because they tend to cater to the top management
of all these IT giants who are setting up shops in the country.
Clearly, there have been high expectations for the upcoming Union Budget
2023–24. Should there be such high expectations? What are a few of your
suggestions for this?
Answer- Fingers crossed! We
are looking at better lending rates, which would help the developers’ complete
projects on the fastrack. Secondly, we are also expecting better repo rates or
a reduction in repo rates, which would in turn affect the monthly EMI payments
of residential buyers, which should also drive-up demand. With "INDIA
SHINING" and all eyes on India as the fastest-developing region on the
globe, the upcoming financial budget should provide the impetus needed to
accelerate the real estate sector, which is one of the biggest contributor to
the country's GDP.
** Manik Anand is the
CEO of White Knight Realty. The views expressed are personal.